Even More Gphone News: Google in Advanced Talks with Verizon & Sprint

The latest info from our good friends those “people familiar with the matter” is that Google is in advanced talks with two U.S. cellphone operators: Verizon Wireless and Sprint Nextel. The talks, of course, are revolving around the two companies offering new Google-powered mobile phones. Google has to get some major wireless operators to sign on to this project if it’s to reach its rumor-generated goal of getting Gphones in front of consumers by the middle of next year.

This wouldn’t be a bad entry into the market, as Verizon is the No. 2 carrier, and Sprint is the No. 3 carrier (in the U.S. by subscribers). And let’s not forget that Google has loads of cash right now (not to mention a stock that’s about to hit $700). The speculation is that this partnership might allow the big bad cellphone companies to offer cheaper phones, since Google’s licensing fees (for its software and operating system) are probably going to be lower than the industry standard. The search giant is more likely to cash in on cellphone advertising when/if it becomes the next big thing (or so shareholders are hoping by paying that inflated price for the stock).

But since the phones would be open to third party application development, Google is still working out the details on how it will protect cellphone consumers within the context of privacy and security. The other detail being worked on is the advertising itself. Just because wireless carriers will likely be paying a much smaller licensing fee to Google (versus the other alternatives already out there) doesn’t mean they don’t want a piece of the cellphone advertising pie. And how will the consumer react to cellphone advertising? These are all questions currently being pondered by executives in large conference rooms.

An interesting side story is the fact that Verizon and Google were recently fighting a battle in Washington over whether wireless carriers should open up their networks. Verizon was in the process of trying to overturn certain new rules the FCC agreed to because of Google. But last week Verizon dropped its appeal. While a spokesman for Verizon said there was no link between the lawsuit dropped and discussions with Google, well, it does seem like a coincidence that the two companies are now playing nice in the sandbox…